I am a card-carrying Democrat and supporter of President Obama. I will vote for him again in November.
But the attacks against Mitt Romney’s record at Bain Capital – by both his Republican brethren and by Democrats – and the demonization of the private equity industry are really starting to annoy me. I won’t vote for him for president based on his policies and the policies of the party he represents, but I believe Mitt Romney’s business track record at Bain Capital, and the private equity industry as a whole, is deserving of a full-throated defense.
First, Bain Capital is a great firm. I have co-invested with them and some of my closest friends are managing directors there and you will not find a smarter, higher integrity, harder working group of professionals. They have also been incredibly generous with their success and become philanthropic leaders, both in the Boston community and beyond. If you are going to pick on a private equity firm for bad behavior and hubris (of which there is plenty), they are the last ones to select.
Second, the work of private equity is a healthy part of our capitalist system. Damning private equity as a market force is absurd in a free market economy. Should bad, poorly managed companies be allowed to destroy value? Should fast-growing, innovative businesses receive capital and support to accelerate their growth? And should hard-working pensioners and retirees be allowed to invest their savings in an asset class that outperforms nearly every other one available? Private equity has an important role and should be lauded, not lambasted. The WSJ does a nice job of making this case here.
I’m not saying Romney, Bain Capital or private equity are perfect. I’m sure there were bad bets made or cases or situations where Bain Capital was overly aggressive in pulling out fees and, as a result, bankrupted the businesses they invested in, such as GS Industries. And Romney, as much good as Bain Capital does for investors, entrepreneurs and businesses, is a bit fast and loose with his soundbite claim of creating 100,000 net jobs at Bain Capital. Dan Primack does a nice job of running through the fact and fiction behind the various claims here.
But the fact that Bain Capital has amassed over $60 billion in investor capital, and the fact that there are over 2,300 private equity firms managing $2.4 trillion, suggests that this is a massive force in our global economy that attracts the best talent, capital and companies for a good reason.
I am tired of seeing politicians from both sides of the aisle talk out of both sides of their mouth. Capitalism is a force for good and we are counting on the capitalism system to enable us to grow our way out of this economic malaise by creating wealth and jobs, expanding free trade and innovation. So let’s stop this name-calling nonsense (is Warren Buffet a corporate raider?) And instead focus on the important policy issues surrounding the economy, health care, foreign policy and social policies.
That’s why I’ll vote for Obama for President again in 2012. Not because Mitt Romney was anything but a spectacular entrepreneur and business executive.
Jeff Bussgang is general partner at venture capital firm Flybridge Capital Partners.You can follow him on Twitter @bussgang